Retirement & Health Benefit Report for Feb. 1, 2019

Fred Yancey & Mike Moran

Feb 01, 2019

What’s the matter with me
I don’t have much to say
Daylight sneakin’ through the window
And I’m still in this all-night cafe
Walkin’ to and fro beneath the moon
Out to where the trucks are rollin’ slow
To sit down on this bank of sand
And watch the river flow."
Bob Dylan

The introduction of bills has slowed markedly as committees now focus on having public hearings. Then bills are moved out of their respective committees through action in Executive Session. February 22 (policy bills) and March 1 (fiscal bills) are the cutoff dates. Bills that have not advanced by then, ‘die’.

This is a brief summary of bills of interest and their status.

Retirement Related Proposals

SB 5400/HB 1390 would provide a 3% cost of living adjustment (COLA) to TRS1 and PERS1 members. These bills are Select Committee for Pension Policy (SCPP) agency request legislation. Both bills are still awaiting scheduling before their respective fiscal committees.

SB 5360/HB 1308 | Revise provisions in the public employees’ retirement system, the teachers’ retirement system, and the school employees’ retirement system with regard to plan membership default. It would change the present retirement plan default for new hires from Plan 3 to Plan 2.

SB 5360 had a public hearing on 1/30 at 3:30 before the Senate Ways and Means Committee and Executive Session is scheduled for February 4th.

HB 1308 had a public hearing on 1/28 at 3:30 before the House Appropriations Committee and Executive Session is scheduled for February 7th.

SB 5414/HB 1409 prohibits a contract year for employee benefits from exceeding two hundred sixty days, for K–12 employees. Currently, upon retirement, an individual can cash in his/her accumulated sick leave at a 1:4 ratio using a maximum of 180 days. This change would increase the maximum to 260 days reflecting the longer contract years many school employees, especially administrators work.

Both bills are awaiting scheduling for a public hearing in Appropriations (House) or Ways and Means (Senate) committees.

SB 5178/HB 1132 concerns early retirement options for members of the teachers’ retirement system and school employees’ retirement system plans 2 and 3. It proposes changing the current option for early retirement at 62 years of age with no penalty to 60 years of age. Both bills are still awaiting public hearings.

Substitute Options for early Retirees

HB 1139 is a large bill relating to expanding the current and future educator workforce supply. A previous version of the bill passed the House last session but got no action in the Senate. This bill, by Representative Santos, is basically a re-introduction of the previous bill. Sections 304/305 state that educators that are members of Teachers’ Retirement System (TRS) Plans 2 or 3 that retired under the 2008 Early Retirement Factors are permitted to return to work before age 65 in any non-administrative position, not just in substitute teaching and instructional positions, and work for up to 867 hours per year without suspension of pension benefits. The ending date on the current provisions of August 1, 2020, as well as the separate section expiring the section of law, are removed, making the section effective indefinitely. A provision similar to the TRS provision is created for School Employees’ Retirement System, which is for classified school employees. It also removes the August 1, 2020 sunset date and the directive regarding substitute pay. It had a Public Hearing on 1/24 before the House Education Committee and is awaiting further action.

SB 5430/HB 1388 allow retirees who retired under alternate early retirement factors enacted in chapter 491, Laws of 2007, to use post-retirement options prior to reaching age sixty-five. This is SCPP agency request legislation. It is similar to the above referenced bill but broader in that administrators are not excluded, bus drivers, para-pros, OT’s etc. are included. It includes PERS retirees who have retired from positions with cities and counties for example. Smaller cities/counties need the expertise of their retiree for short durations and testified in support of this change. Both bills are still awaiting hearings before their respective fiscal committees.

HB 1362 concerns benefits eligibility during post-retirement employment for members of the public employees‘, teachers’, and school employees’ retirement systems, plans 2 and 3. It is similar to SB 5430/HB 1388 above. The sponsor supports HB 1388 cited above and will not push this bill.

SB 5350/HB 1413 Authorizes the following, at the time of retirement, to purchase an optional actuarially equivalent life annuity benefit from:

The public employees’ retirement system plan 1 fund;

The public employees’ retirement system combined plan 2 and plan 3 fund;

The public safety employees’ retirement system plan 2 fund; or

The school employees’ retirement system combined plan 2 and 3 fund, as appropriate.

This bill was agency request legislation from the SCPP. SB 5350 held a public hearing 1/30 and the bill is scheduled for Executive Session on 2/4 before the Senate Ways and Means Committee. HB 1413 has a public hearing scheduled February 7th.

School Employee Benefit Board (SEEB)Health Related Proposals

School districts need to continue contacting their legislators to educate them and express any concerns over the impending costs of SEBB. It has become clear that legislators are expressing discomfort, (some might say ‘shock’) with the $900+million-dollar cost of implementing the program and collective bargaining agreement. But they are not yet talking about the unfunded costs expected to be borne by districts.

Important Correction: At the March meeting of the SEB Board, staff reported that the projected costs to the state for SEBB would be in the neighborhood of $200-$300 million dollars. I have indicated that projection was for school district additional costs. Wrong! At that same meeting, those costs were projected to be $30-$40 million in the aggregate. Wayne Leonard, from Mead School District estimated his district’s cost to be $750,000. Note, these figures were just best guesses back then, pre-collective bargaining agreement (CBA), and pre-gathering of any data from school districts. Until the Legislature approves the CBA, premiums are established, and all resolutions are adopted implementing eligibility, no one knows actual costs. Stay tuned.

Health Care

SB 5469/HB 1085 Concerns reducing the insurance premium for Medicare-eligible retiree participants in the public employees’ benefits board program. It requires the amount of a premium reduction for Medicare eligible retiree participants to be no less than fifty percent of the premium cost.

HB 1085 held a public hearing 1/28 at 3:30 before the House Appropriations Committee. A panel representing WEA-Retired, RPEC (Public Employee Retirees,) and WSSRA (School Retirees) testified in favor of the bill. They collectively painted a very vivid picture of struggling trying to balance fixed incomes with rising medical and insurance costs.

HB 1813 incorporates the costs of employee health benefits into school district contracts for pupil transportation. A portion of the bill reads : “Beginning January 1, 2020, any pupil transportation services contract must include: (i) Sufficient funds specifically for the contracting employer to provide the employees of the contractor with an employer health benefits contribution equal to the rate for the school employees’ benefits board program, less the retiree remittance for the public employees’ benefits board; and (ii) An amount equivalent to the total employer and employee contribution rate to the school employees’ retirement system, multiplied by the estimated salaries of the employees of the contractor. This bill is before the House Appropriations Committee and is yet to be scheduled for a public hearing. WASBO has been asked to review this bill for any concerns.

Other Bills That May Have Fiscal/Hr Impacts For Districts

SB 5473/HB 1445 make unemployment benefits accessible to persons with family responsibilities and other availability issues and making clarifying changes. Among other things, it revises the employment security act to provide unemployment benefits (UI) to people with family responsibilities and other availability issues. Districts will have new claimants for UI which a district could not contest.

SB 5743 is scheduled for a public hearing on 2/4@10 AM before the Senate Labor and Commerce Committee.

HB 1445 held a public hearing on 1/30 and is scheduled for Executive Session on 2/4 before the House Labor and Workplace Standards Committee.

SSB 5449/HB 1399 makes technical corrections requested by the Employment Security Department in the Family and Medical Leave Act passed last session.

A public hearing was held on SSB 5449 (a substitute bill) on 1/24. Executive action took plane on 1/28. The bill is now in Rules awaiting further action to move it to the floor calendar and the bill is awaiting executive action by the committee.

SHB 1399 (substitute bill) was heard on 1/22. Executive action was taken on 1/28 and the bill is now before the House Appropriations Committee.

SB 5513/HB 1515 concern the employer-employee relationship by clarifying the difference between an independent contractor and an employee.

A public hearing for SB 5513 was held on 1/28. Close to 1,000 hair dressers descended on campus and signed in to testify in opposition. As one hair stylist said, “Don’t mess with women who have scissors.” The prime sponsor, Senator Karen Keiser, was stunned. She had no idea this bill would affect workers who rented chairs and spaces as independent business people. The Senator got the message and indicated just recently the bill will ‘die’.

HB 1515 had a similar public hearing on 1/28. It has been scheduled for Executive Sessions twice and been cancelled. It is currently scheduled for February 4th.
The legislative river continues to flow……….

Fred Yancey/ Mike Moran
The Nexus Group

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